AP Photo/Paul Sancya

Job fair in Southfield, Michigan, August 25. State has one of highest jobless rates in country.

Obama announced the plan on the eve of midterm elections when incumbents in both parties are facing stiff challenges because of the grinding economic crisis. It calls for spending $50 billion over the next year to set up an “infrastructure bank” run by the government that would seek investments from banks and other financial institutions.

The bank will “focus on the smartest investments,” based on “competition and innovation,” said Obama. He promised that it will “not only create jobs immediately” but “make our economy hum over the long haul.” The White House has not stated how many jobs it expects this project will create.

“The outside investors would expect a competitive return on their money,” noted the New York Times, “so many of the completed projects would have to charge fees, taxes, or tolls.”

In a recent opinion piece lauding the proposal as “a first step,” New York Times columnist Bob Herbert acknowledged that “it’s not in any way commensurate with our overwhelming infrastructure needs or the gruesome scale of the nation’s unemployment crisis.”

The official unemployment rate has hovered around 10 percent over the past year. With the 9.6 percent rate reported for August, more than 17 million workers are jobless and nearly 9 million others seeking full-time jobs have been forced into part-time hours. Since January 2009 bosses have eliminated 940,000 construction jobs alone.

A report issued last year by the American Society of Civil Engineers on the deterioration of U.S. infrastructure said it would take $2.2 trillion over five years to get the roads, bridges, levees, schools, water supply, and other infrastructure into decent shape.

Allocating $50 billion over the next year toward infrastructure repairs is also just a drop in the bucket compared to the $700 billion the federal government allocated in bank bailouts with passage of the Troubled Assets Recovery Program in October 2008.

Speaking in Cleveland two days after his Labor Day speech, Obama announced a cut of nearly $200 billion in business taxes over two years. This includes allowing companies to fully deduct the cost of purchasing equipment through 2011 and a permanent extension of research tax credits.

The White House hopes these incentives will spur employers to spend, invest, and create jobs. But employers continue to be reluctant, in spite of these gifts, while their profit margins are under pressure in a declining economy.